UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15869 / September 2, 1998
Securities and Exchange Commission v. Scott B. Walker, Equity
Management Services, Scott L. Simpson, and Zappa International
Corporation, Civil Action No. 98-CV-213-B (USDC Wyo.)
The Commission announced today that it obtained an emergency
restraining order prohibiting the fraudulent sale of interests in
two prime bank-type trading programs which falsely offered
guaranteed returns up to 100 percent per year and which claimed
to be sponsored by the Federal Reserve and the International
Monetary Fund. The order, entered September 1, 1998 by Judge
Clarence A. Brimmer (D.C. Wyoming), included an order freezing
the assets of the defendants and requiring the repatriation of
assets.
The complaint named as defendants Scott B. Walker (Walker),
Equity Management Services (EMS), Scott L. Simpson (Simpson), and
Zappa International Corporation (Zappa), and alleged that since
February 1998 to the present, the defendants had engaged in a
fraudulent prime bank investment scheme in which they guaranteed
high rate of return and falsely represented that the investors'
principal was fully secured by a top European Bank and that the
programs were implemented through traders licensed by the
International Monetary Fund. The Commission alleged that Walker
and EMS, both located in Afton, Wyoming, failed to disclose the
use of investor funds to pay solicitation fees to others who
referred the investor and to make "Ponzi" payments to earlier
investors who sought the return of their investment. The
complaint also alleged that Simpson and Zappa, located in
Richmond, Texas, offered interests in the Zappa International
Asset Management Program which would generate returns for
investors of 25 percent per month. The Commission alleged that
materials regarding the Zappa program also were distributed by
Walker and EMS. The Zappa program, according to the complaint,
falsely stated that the program was sponsored by the Federal
Reserve and the International Monetary Fund and that the program
was guaranteed by a "top world bank." The Commission alleged
that through their false and misleading statements, Walker, EMS,
Simpson and Zappa violated the antifraud provisions, Section
17(a) of the Securities Act of 1933 and Section 10(b) of the
Securities and Exchange Act of 1934 and Rule 10b-5 thereunder.
Judge Brimmer also ordered a freeze upon all assets derived from
the fraudulent conduct of Walker, EMS, Simpson and Zappa held by
the relief defendant Eagle Vision Holdings, Inc. of Washington.
The Commission requested the emergency action to prevent Walker,
EMS, Simpson, Zappa and Eagle Vision Holdings, Inc. from
transferring or liquidating any funds.
The Commission wishes to thank the Wyoming Secretary of State's
Securities Division for its assistance in this matter.